Near the end of 2019, the management of Dimsdale Sports Co., a merchandising company, prepared the following estimated balance sheet for December 31, 2019.

To prepare a master budget for January, February, and March of 2020, management gathers the following information.

1. The companys single product is purchased for $30 per unit and resold for $56 per unit. The expected inventory level of 5,250 units on December 31, 2019, is more than managements desired level, which is 20% of the next months expected sales (in units). Expected sales are January, 7,250 units; February, 8,750 units; March, 11,500 units; and April, 10,000 units.
2. Cash sales and credit sales represent 20% and 80%, respectively, of total sales. Of the credit sales, 61% is collected in the first month after the month of sale and 39% in the second month after the month of sale. For the December 31, 2019, accounts receivable balance, $125,000 is collected in January 2020 and the remaining $395,000 is collected in February 2020.
3. Merchandise purchases are paid for as follows: 20% in the first month after the month of purchase and 80% in the second month after the month of purchase. For the December 31, 2019, accounts payable balance, $65,000 is paid in January 2020 and the remaining $315,000 is paid in February 2020.
4. Sales commissions equal to 20% of sales are paid each month. Sales salaries (excluding commissions) are $72,000 per year.
5. General and administrative salaries are $132,000 per year. Maintenance expense equals $1,900 per month and is paid in cash.
6. Equipment reported in the December 31, 2019, balance sheet was purchased in January 2019. It is being depreciated over eight years under the straight-line method with no salvage value. The following amounts for new equipment purchases are planned in the coming quarter: January, $31,200; February, $103,200; and March, $21,600. This equipment will be depreciated under the straight-line method over eight years with no salvage value. A full months depreciation is taken for the month in which equipment is purchased.
7. The company plans to buy land at the end of March at a cost of $170,000, which will be paid with cash on the last day of the month.
8. The company has a working arrangement with its bank to obtain additional loans as needed. The interest rate is 12% per year, and interest is paid at each month-end based on the beginning balance. Partial or full payments on these loans can be made on the last day of the month. The company has agreed to maintain a minimum ending cash balance of $28,000 at the end of each month.
9. The income tax rate for the company is 39%. Income taxes on the first quarters income will not be paid until April 15.

Required: Prepare a master budget for each of the first three months of 2020; include the following component budgets.

1. Monthly sales budgets. 2. Monthly merchandise purchases budgets. 3. Monthly selling expense budgets. 4. Monthly general and administrative expense budgets. 5. Monthly capital expenditures budgets. 6. Monthly cash budgets. 7. Budgeted income statement for the entire first quarter (not for each month). 8. Budgeted balance sheet as of March 31, 2020.

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DIMSDALE SPORTS COMPANY Estimated Balance Sheet December 31, 2019 Assets Cash $ 35,000 Accounts receivable 520,000 Inventory 157,500 Total current assets $ 712,500 Equipment 588,000 Less: Accumulated depreciation 73,500 Equipment, net 514,500 Total assets $1,227,000 Liabilities and Equity Accounts payable $ 380,000 Bank loan payable 12,000 Taxes payable (due 3/15/2020) 91,000 Total liabilities $ 483,000 Common stock 474,000 Retained earnings 270,000 Total stockholders' equity 744,000 Total liabilities and equity $1,227,000 Monthly sales budgets. DIMSDALE SPORTS CO. Sales Budget For January, February, and March 2020 Budgeted Unit Budgeted Budgeted Total Sales Unit Price Dollars January February March Totals for the quarter Monthly merchandise purchases budgets. DIMSDALE SPORTS CO. Merchandise Purchases Budget January, February, and March 2020 January February 8,750 11,500 20% 20% March 10,000 20% Next month's budgeted sales (units) Ratio of inventory to future sales Budgeted ending inventory (units) Budgeted units sales for month Required units of available merchandise Beginning inventory (units) Units to be purchased Monthly selling expense budgets. DIMSDALE SPORTS COMPANY Selling Expense Budget January, February, and March 2020 January February March Budgeted sales Sales commission percent Sales commissions Sales salaries Total budgeted selling expenses Monthly general and administrative expense budgets. February March January $ 588,000 Equipment - beginning of month Equipment purchases Equipment - end of month DIMSDALE SPORTS CO. General and Administrative Expense Budget January, February, and March 2020 January February March Monthly capital expenditures budgets. DIMSDALE SPORTS COMPANY Capital Expenditures Budget January, February, and March 2020 January February March Total Calculation of Cash receipts from customers: January February March Sales in units Selling price per unit Total budgeted sales Cash sales 20% Sales on credit 80% -Collected in February March 31 Receivable Total January March S 520,000 $ 125,000 $ 395,000 Accounts Receivable - January 1 Credit sales from: January $ 0 0 February March 0 Total collection of receivables $ 125,000 S 395,000 S 0 S 0 Total cash receipts from customers January February March Collections of receivables Calculation of payments for merchandise: January February March Desired ending inventory (units) Budgeted sales in units Total units required Beginning inventory (units) Number of units to be purchased Cost per unit Total cost of purchases --Paid in March 31 Total March Payable January $ 65,000 February $ 315,000 S 380,000 Accounts Payable - January 1 Merchandise purchases in: January $ 0 February 0 March 0 Total cash paid for merchandise S 65,000 $ 315,000 S 0 S 0 DIMSDALE SPORTS CO. Cash Budget January, February, and March 2020 January February March Beginning cash balance Total cash available Cash payments for: 0 0 Total cash payments Preliminary cash balance Ending cash balance Loan balance January February March Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month DIMSDALE SPORTS CO. Budgeted Income Statement For Three Months Ended March 31, 2020 Operating expenses Total operating expenses 0 $ 0 DIMSDALE SPORTS CO. Budgeted Balance Sheet March 31, 2020 Assets Total current assets 0 Equipment, net Total assets Liabilities and Equity Liabilities Bank loan payable Total liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Equity